(As Yet) Unpublished Papers:

 

NEW! Racing with a rearview mirror: Outcome lags and investment fluctuations (with Chantal Marlats and Lucie Ménager)

Abstract: We model an R&D race in which investors sequentially attempt to achieve an innovation using a risky technology that produces outcomes with a lag. This lag creates a tradeoff between the incentive to invest in a potentially rewarding technology and the risk of being preempted by competitors. In equilibrium, players alternate between periods of strictly decreasing investment and investment breaks, which vanish when the outcome lag is small enough. By contrast, without an outcome lag investment is constant until the common belief that the innovation is feasible reaches a threshold, after which investment stops forever. We thus identify a novel economic force that drives fluctuations in R&D spending. While socially optimal investment is also non-monotonic with an outcome lag, the equilibrium is inefficient. Non-monotonic investment patterns persist when the outcome lag is uncertain, when investment costs are convex, and when investors decide both when and how much to invest.

 

Breakdowns in the Lab (with Johannes Hölzemann)

Abstract: We experimentally investigate a game of strategic experimentation in which information arrives through fully revealing, publicly observable, breakdowns. As predicted by theory, we find that players experiment significantly less, and payoffs are lower, when actions are hidden. We view this as evidence that behavior is systematically affected by the informational environment and consistent with strategic free-riding.

 

Work in Its Earlier Gestational Stages:

• Jumping to Conclusions (with Johannes Hörner & Sven Rady)
  

• Over-and Under-Experimentation in a Patent Race with Private Learning (with Kaustav Das)